The moves damped speculation that MGM, the world's second- largest casino company, may be for sale. The possibility of a buyout had driven the stock price up 37 percent since May 21, when Kerkorian, 90, said he may try to buy the Bellagio Hotel & Casino and CityCenter, a hotel, condo and casino project.

Kerkorian's Tracinda Corp., which owns a 56 percent stake in MGM Mirage, said today it will "continue to monitor" its investment. The statement came after MGM said it would join with Kerzner International Holdings Ltd. to build the new casino.

"An outright sale of MGM in the near term is now off the table," Harry Curtis, an analyst with JP Morgan Securities Inc., said today in a note.

MGM shares fell $5.34, or 6.2 percent, to $81.16 at 12:04 p.m. in New York Stock Exchange composite trading, the biggest decline since August.

MGM and closely held Kerzner said they will build the new casino on 40 acres of a 78-acre plot owned by MGM. Kerzner will lead the planning and provide cash for the project. Each company will have an equal stake in the casino, they said.

The companies plan to reach a final agreement in the third quarter. They said planning and design will take 1 year, and construction will last about 3 years.

$20 million an acre

MGM Mirage's land for the resort is valued at $20 million an acre, totaling $800 million. The companies said they may create a new brand for the property, on the corner of Las Vegas Boulevard and Sahara Avenue.

The new resort may cost $4 billion, based on development costs and land values of other recent projects on the Strip, CIBC analyst David Katz wrote in a note today.

MGM dissolved a board committee formed to consider any Kerkorian proposals. The company said it received "overwhelming interest" from other parties after Kerkorian's May announcement.

MGM's 7.625 percent note due in 2017 rose 1.2 cents to 97.8 cents on the dollar today, yielding 8 percent, according to Trace, the NASD's bond-price reporting service.